-- Posted Friday, 8 May 2009 | | Source: GoldSeek.com
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Investors justifiably increasingly concerned about adverse developments in the financial markets and economy, are seeking Safe Haven in Gold and Silver, as well as in traditional retirement vehicles (such as 401(k)s and similar accounts).
But investors have often been frustrated in finding such Safe Haven, largely due to the policies and Market Interventions of The Fed-led Cartel* of Key Central Bankers and their Favored Financial Institutions.
Indeed, regarding Gold and Silver, it is becoming ever more widely known that, The Cartel* regularly intervenes to drive down prices of Gold and Silver in the market. These Precious Metals are the primary targets of The Cartel’s interventions because they legitimately compete with The Cartel’s Fiat Currencies and Treasury Securities as Measures and Stores of Value.
As well it is becoming increasingly apparent that The Cartel regularly intervenes in the Equities and Strategic Commodities Markets. Reflecting the acknowledgment of massive ongoing overt and covert intervention, no less an authority than the Dean of the Newsletter writers Richard Russell recently finally acknowledged:
“This government will stop at nothing, even including manipulation. What the Fed does not want is a swooning stock market, surging Gold, or sinking bonds.”
Richard Russell, 05/06/09
www.lemetropolecafe.com
Deepcaster entirely agrees with Richard Russell’s recent conclusion, (and, indeed has been writing about these Interventional for several years now), but we would add one addendum. The evidence is overwhelming that Covert (as well as Overt) manipulation is all aforementioned sectors have been ongoing for several years. It is not just a recent phenomenon. Confirming this view, the Secretary-Treasurer of the Gold Anti-trust Action Committee (www.gata.org), Chris Powell, has written an excellent comprehensive article “There are No Markets Anymore, Just Interventions.”
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and favored financial institutions to read Deepcaster’s December, 2008 Letter containing a summary overview of Intervention entitled “A Strategy for Profiting from the Cartel’s Dark Interventions & Evolving Techniques” and Deepcaster’s July, 2008 Letter entitled “Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast” in the “Latest Letter” Cache at www.deepcaster.com.
Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”
Fortunately Deepcaster has developed a Strategy for Profiting from Gold and Silver despite Cartel Interventions. The highlights of that Strategy are laid out at the end of this article.
But before laying out The Strategy, it is important to identify key Cartel Advantages so we are in a better position to surmount them for Profit and Protection.
1.) One considerable advantage of the Fed-led Cartel is that it ultimately controls, de facto, the structure and regulation of the financial markets and the character and pace of economic activity.
In recent years, The Private-For-Profit Fed’s policy of facilitating excessive borrowing, excessive Monetary Expansion, and the creation of hundreds of trillions of dollars in notional value of Over-The-Counter (dark) derivatives has been the Primary Cause of today’s Financial and Economic Crises.
Specifically, the Excessive Monetary and Credit expansion, and proliferation of Trillions of Dollars of unregulated (dark derivates), were the Primary Cause of the financial market and economic Crises and the credit freezes up which first became evident in 2008.
One of many negative consequences of these developments is that investors have not only suffered losses of up to 50% of the value of their portfolios, but also some have not been able to withdraw their funds from their 401(k) retirement plans. Even those who have been laid off have had difficulty. Some unemployed workers have been unable to withdrawal their (401(k)s) funds for many months, as in the article “401(k)s Hit by Withdrawal Freezes: Investors Cry Foul as Some Funds Close Exits; Perils of Distressed Markets” - Eleanor Laise (http://online.wsj.com/article/SB124148012581385199.html).
Deepcaster’s article “Opportunities to Escape Paper ‘Wealth’ ” (11/07/2008) sets forth detailed Guidelines designed to help avoid the 401(k) depletion or freeze up problems. It can be found in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
2.) A second major advantage which the accrues to The Cartel and its favored Financial institutions, is their access to Dark Pools of liquidity. These are de facto “Private Markets” which are opaque, and generally unregulated, and in which hundreds of billions in securities and derivatives are traded. These Dark Pools include “Project Turquoise” and “Baikal.”
According to the Bank for International Settlements (The Central Bankers’ Bank), the total notional value of OTC (i.e. Over-the-Counter, private, not exchange traded and thus “dark”) Derivatives of June 2008 was 683 Trillion U.S. Dollars. (See www.dis.org -- path > statistics > derivatives > table 19ff.) When one consider that The Fed has taken “only” about $2.2 Trillion of Toxic Derivatives onto its Balance Sheet one realizes that there is considerably more potential for system-threatening toxicity. Needless to say these Dark Markets allow all sorts of chicanery to exist, because there are no public records to scrutinize or any public reporting of trades in certain sectors.
So much for the Fiction of the Markets providing a level playing field, fair and open to all participants, in which price is determined by public trading at prices known to all. More details regarding this topic can be found in “Protecting & Profiting From the Dark OTC Derivatives Contagion” (10/24/2008) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
3.) A third substantial Cartel advantage is the ability to manipulate and/or manufacture Key Statistics. Key Official Statistics are often far removed from the Realities of the economy and market place. For example, consider the latest Real Numbers versus the Official Versions thanks to Shadow Government Statistics.
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported April 15th, 2009
5% 13%
U.S. Unemployment reported April 3rd, 2009
8.5% 20%
U.S. GDP Annual Growth reported April 29th, 2009
-2.5% -5%
All the above Real Numbers are calculated by Shadow Government Statistics the old-fashioned way i.e. with the methods used before the official gimmicking of these numbers, which began in the 1980’s and 1990’s. See www.shadowstats.com Alternate Data.
4.) The Fourth Advantage relates to the Favored (versus disfavored) Financial Institutions -- the so-called Legacy Banks or Mega Banks, which are well connected to The Fed-led Cartel. Because of their size and connections (some of them are The Fed’s Primary Dealers) they are in a vastly superior position compared to medium size or small size institutions.
In addition, they have been “bailed out” by the US Taxpayers (with money that the taxpayers borrow at interest from private for-profit The Fed which prints it for free out of thin air or with a few keystrokes). But given the dominant position, certain Major Financial Institutions can and are starving the medium and smaller ones of credit. This will allow the Mega Banks to acquire them for just pennies on the dollar.
Indeed, this phenomenon bears an eerie resemblance to the 1930’s, when assets were scarfed up ‘on the cheap’ by the major financial institutions.
The starvation of the credit is not limited to mid-sized and smaller Financial Institutions, but extends to investors and taxpayers as well. They have increasing difficulty getting credit; or if they can get credit, find it provided at usurious rates.
There is thus increasing evidence that this is a conscious policy (which is a component of the Cartel “End Game” as we call it) – to acquire the assets of small investors and institutions cheaply and for the benefit of the big international institutions, some of which are likely owners of the Private-For-Profit U.S. Federal Reserve. The reader is invited to examine the evidence in “Investor Advantage -- Revisiting the Cartel’s ‘End Game’ ” (3/6/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
5.) A Final Cartel Advantage essential to Note -- the ability to create unlimited quantities of Fiat currencies. The vast amount of monetary creation by The Fed in recent years (ranging from above 8% to over 16% annualized since 2006) coupled with the multi-trillion dollar U.S. deficit and the downstream unfunded future liabilities of the U.S. government (of about $60 trillion plus and climbing), eventually spells doom for the U.S. dollar as well as hyperinflation for the consumer.
Indeed the debasement of the U.S. dollar has already begun – it has dropped over 30% in the last years, basis the USDX. This debasement is, in effect a stealth tax on the US consumer. To recapitulate the Money Supply facts, Shadow Government Statistics money supply (M3) growth at about 8% (at the beginning of 2006) contrary to official figures, which reported 4.5%. In March 2006, The Fed stopped releasing M3 figures and shortly thereafter M3 began to shoot up to 16% in 2008 and then back down to still-substantial 8% as we write. Whether an 8% or 16%, this rate of monetary inflation necessarily entails substantial price inflation. Indeed it entails hyperinflation.
So how can average investors and taxpayers surmount these challenges? Deepcaster has developed A Strategy for Profit and Protection with Gold and Silver in spite of the Interventions. We lay out the Highlights of that strategy here (further details are available in the article “Defeating the Cartel... With Profit” (3/28/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com).
A Strategy for Profit and Protection
Normally, (that is to say, in a Genuine Free Market situation) the go-to “Safe Haven” Assets in times of Financial Crisis would be the Precious Monetary Metals Gold and Silver, as well as other assets such as Strategic Commodities.
We say “normally” because nearly every time yet another Financial Market Crisis has come prominently into the public eye in recent years The Cartel* of Central Bankers has successfully taken down the price of what would normally be The Safe Haven Assets - - the Precious Monetary Metals. A prime example occurred during the much-publicized demise of Bear Stearns in March, 2008, which was accompanied by a vicious Takedown of Gold and Silver. In a non-manipulated Market, given the fact that Bear Stearns reflected great and increasing weaknesses in the Financial System, Gold and Silver should have skyrocketed. But instead they were dramatically taken down.
Yet, the late 2008 - early 2009 Crises appear to be different. Gold launched from the mid $700s/oz. to around $900/oz. during September, 2008, fell back to the low $700s and then launched again toward $900 in December, 2008 and has actually exceeded $900 several times in 2009.
So the question now, at the beginning of May, 2009, is it different this time around? Have Gold and Silver finally thrust off the shackles of Cartel Intervention? Or will The Cartel be able once again to cap and take down the prices of these Precious Monetary Metals and Strategic Commodities? Deepcaster has addressed this question in a Forecast he recently issued for the likely fate of Gold, Silver, Crude Oil & the U.S. Dollar in the Alerts Cache at www.deepcaster.com.
One thing is certain: The Cartel will certainly attempt again to take down Gold, Silver and Crude Oil at the earliest opportunity because the Strategic Commodities and Precious Monetary Metals are Competitors as Stores and Measures of Value with the Central Bankers’ Treasury Securities and Fiat Currencies.
Yet there is a Strategy which accommodates Cartel Interventional attempts and at the same time provides excellent Profit Opportunities, whether the Interventional attempts are successful or not.
A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan (as Deepcaster is) while at the same time insulating oneself somewhat from future Takedowns. The following points provide an outline of The Strategy (particularly as applied to the Gold and Silver Markets) and are designed to help avoid Portfolio unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
1) Recognize that The Cartel is still Potent, as difficult as that may be psychologically for Deepcaster and other Hard Asset Partisans to acknowledge. The Cartel is still the Biggest Player in many markets and, if the timing and market context are propitious, the Biggest Player makes Market Price. In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and that is a tremendous advantage; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.
2) Accumulate Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
3) In order to know when one is likely near the bottom of a Cartel-generated takedown, it is essential to take account of the Interventionals as well as the Technicals and Fundamentals. Paying attention to the Interventionals facilitated Deepcaster recommending five short equities positions as of early September (just before the Fall Crash) all of which we subsequentially recommended be liquidated profitably.
4) For example, regarding Gold & Silver, near such Interim Bottoms, accumulate a combination of the Physical Commodity (Deepcaster prefers “low premium to melt” bullion coins) and well-managed Juniors with large reserves. (Deepcaster provides a list of such Junior Candidates in our December 20, 2007 Alert “A Strategy for Profiting from Cartel Intervention” available in the Alerts Cache at www.deepcaster.com.) The “Physical” and “Juniors” are for holding for the long-term as a Core Position.
5) Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term call options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
6) However, there will be a time when The Cartel price capping is ineffective and Gold & Silver make record moves upward. The benefit of this Strategy is that one will likely be long in one’s speculative positions when this happens.
7) Near the next Interim Top, liquidate the long options and majors. Again, in order to know when we are close to the next Interim Top, it is essential to monitor the Interventionals, as well as Fundamentals and Technicals.
8) Near that Top, sell short or buy puts on Majors. We re-emphasize the Majors as preferred vehicles for trading positions because such positions are more liquid and tend to be quite responsive to Cartel moves.
9) Near the next Interim Bottom, cover your shorts and liquidate your puts and go long again to begin the process all over again. We emphasize that it is essential to consider the Interventionals as well as the Fundamentals and Technicals in order to determine the approximate Interim Tops and Bottoms.
10) Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets and/or Retirement Accounts only to have those assets effectively de-valued by Cartel Takedowns and other Cartel actions. This is extremely injurious to many average citizens in many countries who are saving for the rainy day or retirement and have their retirement and/or reserves effectively taken from them. In order to help prevent this and similar outrages, we recommend taking three steps:
a) Become involved in the movement to Audit and then abolish the private-for-profit U.S. Federal Reserve as Deepcaster, ex-Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. The ‘Audit The Fed’ Bill is H.R. 1207 (and has over 100 co-sponsors); and The Abolish The Fed Bill is H.R. 2755.
b) Join the Gold AntiTrust Action Committee, which works to eliminate the manipulation of the Gold and Silver markets (www.gata.org). GATA is a non-profit organization, which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities.
c) Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game.” Clearly The Cartel is sacrificing the U.S. Dollar to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever. See Deepcaster’s July 2008 Letter in the ‘Latest Letter’ Archives at www.deepcaster.com.
If this aforementioned Strategy is employed effectively, it can result both in an increasing Core Position in Gold and Silver, and in considerable profit along the way.
Additional insights and details regarding this Major Strategy, which are essential to profiting from the Fed’s Policies, are laid out in Deepcaster’s article of 3/06/09 entitled “Investor Advantage: Revisiting The Cartel’s ‘End Game’.”
Protection and profit required Proactivity and attention to the Interventionals, Fundamentals and Technicals, not “Buy and Hold.” “Buy and Hold” rarely succeeds anymore as current market conditions attest.
Indeed, the Key Point of the Strategy for Protection and Profit is careful attention not only to the Fundamentals and Technicals but also to the Interventionals. These Overt and Covert Cartel-generated Interventions have the power to move markets as those who study the matter can attest.
Thus, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover engaging in the Actions suggested above can help prevent The Cartel’s obtaining Superpower status and aid in achieving protection and profits as well.
Deepcaster
May 8, 2009
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Gravitas, Pietas, Virtus
-- Posted Friday, 8 May 2009 | Digg This Article
| Source: GoldSeek.com
